Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
The Corona Riots Begin, US Covid-19 Catastrophe Trend Analysis - 3rd Jun 20 -
Stock Market Short-term Top? - 3rd Jun 20
Deflation: Why the "Japanification" of the U.S. Looms Large - 3rd Jun 20
US Stock Market Sets Up Technical Patterns – Pay Attention - 3rd Jun 20
UK Corona Catastrophe Trend Analysis - 2nd Jun 20
US Real Estate Stats Show Big Wave Of Refinancing Is Coming - 2nd Jun 20
Let’s Make Sure This Crisis Doesn’t Go to Waste - 2nd Jun 20
Silver and Gold: Balancing More Than 100 Years Of Debt Abuse - 2nd Jun 20
The importance of effective website design in a business marketing strategy - 2nd Jun 20
AI Mega-trend Tech Stocks Buying Levels Q2 2020 - 1st Jun 20
M2 Velocity Collapses – Could A Bottom In Capital Velocity Be Setting Up? - 1st Jun 20
The Inflation–Deflation Conundrum - 1st Jun 20
AMD 3900XT, 3800XT, 3600XT Refresh Means Zen 3 4000 AMD CPU's Delayed for 5nm Until 2021? - 1st Jun 20
Why Multi-Asset Brokers Like TRADE.com are the Future of Trading - 1st Jun 20
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

The Solar Energy Tipping Point, Polysilicon Prices in 2012

Commodities / Solar Energy Nov 27, 2012 - 03:37 AM GMT

By: Investment_U

Commodities

David Fessler writes: Solar energy detractors point to the fact that it can’t compete without “huge” government subsidies. And up until now, I couldn’t argue to the contrary.

But very soon, those detractors will likely be eating their words. I’ve said it many times in the past: Technology marches on, and the cost of manufacturing will come down.


Well the cost of manufacturing solar isn’t just coming down; it’s dropping through the floor. By the end of this year, solar will be so cheap it will compete with just about any other form of generation. It already does in some places, and at commercial scale levels. The best part? It will do it without subsidies.

You see, solar panel prices are about to cross a tipping point. It’s all due to the drop in price of a solar module’s most crucial ingredient: polysilicon.

The Polysilicon House of Cards

Polysilicon prices have collapsed 90% in the last five years. That translates directly into lower module costs, lower panel prices and ultimately into a lower installed cost per watt.

How did this happen? Way back in 2006, there was a run on polysilicon. It turns out it’s the same material used to make integrated circuits. But all of a sudden, the solar industry was booming, and competing for what was then a limited supply.

Its use for solar was rising rapidly, and 2006 was the first year that 50% of all polysilicon went into the manufacture of modules for solar panels. And panel manufacturers were clamoring for even more.

Polysilicon makers were laughing all the way to the bank, and then some. They essentially were an oligopoly, and were earning upwards of 40% margins on their product, according to a recent research report published by GTM Research.

Prices just kept rising along with demand, and by 2008 the shortage was so severe, polysilicon was selling for over $400 per kilogram on the spot market. Margins had risen to 70%.

Naturally, this lured new players into the market, and led existing makers to expand manufacturing capacity. But they overestimated how much was really going to be needed.

By 2011, much of this additional capacity began to come online, and polysilicon prices started falling. By March of 2011, the spot price had dropped to $80 per kilogram, and by this past December, it was all the way down to $30 per kilo.

This incredibly low spot price was all the leverage customers with long-term contracts needed to renegotiate lower prices.

GTM Research predicts that in 2012, these declining silicon prices will lead to even lower module prices. At the beginning of 2011, module prices were $1.80 per watt. By the end of 2011, they were halved to $0.90 per watt.

Closing in on Grid Parity

This year, GTM expects module prices to breach the $0.70-per-watt barrier and continue to head south. Of course, with other manufacturing costs and installation being relatively fixed, lower raw material means lower panel prices. And $0.70 per watt is below the magic $1.00-per-watt level that’s widely viewed as “grid parity” for solar.

That’s the point where it makes just as much sense to use solar as any other form of generation.

The system I installed at my farm is 10.08 kilowatts (KW). Over its 25-year lifetime, it’s expected to produce an average of 12,000 to 18,000 kilowatt-hours (kWh) per year.

I’m leasing my system for five years, and will then purchase it. My total all-in cost is about $27,000. (Since I’m leasing the system, I don’t receive any government subsidies or tax breaks.)

Let’s assume that the system produces the minimum amount per year, 12,000 kWh.

Multiplying by 25 and then dividing by the cost of the system, we come up with $0.08 per kWh. My current electricity from the grid operator costs $0.14 per kWh.

That’s almost a 50% savings. If I produce even more, my savings will be even higher.

And this system has panels that were manufactured in 2011. Panels made this year will be even cheaper, and so will the all-in cost.

Misinformation and Black Eyes

So what’s keeping solar from being widely adopted? Lack of information, for one…

The industry got quite a black eye over the Solyndra deal.

GTM Research Senior Analyst, Brett Prior, believes the industry will continue to grow at 10% to 20% per year for the foreseeable future. He had this to say about the polysilicon market today:

“After a half-decade of silicon demand outstripping supply, the aggressive expansion plans finally overshot.

“This supply/demand imbalance will push producers to lower contract prices closer to the level of manufacturing costs at $20 per kilogram, and will force higher-cost manufacturers to exit the industry.

“The end result is that the current roster of over 170 polysilicon manufacturers and startups will likely be winnowed down to a dozen survivors by the end of decade.”

I believe that as prices continue to drop, solar will continue to gain in popularity.

Big panel manufacturers like U.S.-based SunPower Corporation (Nasdaq: SPWR) will be around when the dust settles. They currently make the most efficient (19%) commercially available panels in the world. The stock is way off its highs of a year ago, but is up a healthy 22% since the beginning of the year.

So is it solar boom time? I don’t have a crystal ball, but with module prices continuing to drop, it becomes more attractive every day. That’s good news for panel manufacturers, as they’ll continue to improve as volumes ramp up. Investors certainly won’t find them any cheaper than they are right now.

Source: http://www.investmentu.com/2012/January/polysilicon-green-energy.html

by David Fessler, Advisory Panelist, Investment U

http://www.investmentu.com

Copyright © 1999 - 2012 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules